Friday, March 1, 2013

Judge Lucy Koh, the federal judge presiding over two Apple v. Samsung cases in the Northern District of California, has just entered an order striking (or, more precisely, vacating) $450,514,650 ($450 million) from a $1,049,343,540 ($1.05 billion) damages award determined by a jury in August 2012. The $450 million amount corresponds to 14 Samsung products, with respect to which a new damages trial must be held because the court cannot make the adjustments it deems necessary for legal reasons: the jury set only one damages figure per product, but half a dozen different intellectual property rights were found infringed, resulting in a lack of clarity as to what portion of a per-product damages figure is attributable to a given intellectual property right. Samsung's lawyers had reverse-engineered the jury's approach to damages with respect to almost all products, but only to a degree of granularity that enabled the court to identify some legal error on the part of the jury and not to one that would have enabled the court to calculate new damages figures itself. The court recommends to hold the second damages trial only after the appellate proceedings.

Part of the reason why a new damages determination is needed is that Judge Koh disagreed with the notice date concerning certain patents-in-suit. The jury based its award on the notice date provided by Apple, which Judge Koh now believes was too early because only one of the patents, the rubber-banding patent, had actually been listed in a presentation Apple gave to Samsung in 2010.

Whenever it will ultimately be held, the second damages trial over the 14 products with respect to which the jury award has been vacated (Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform) could result in a figure that is lower or higher than (or, theoretically but unlikely, identical to) the one reached by the jury in August. There will have to be a new jury.

Apple had also asked for supplemental damages covering the period from trial to final judgment and for prejudgment interest. The court can determine supplemental damages based on sales figure during the relevant period but "finds that it would be appropriate to delay the consideration of evidence of actual post-verdict sales until after the completion of the appeals in this case". With respect to prejudgment interest, the parties advocated different interest rates. Apple proposed the prime rate; Samsung's counterproposal was the lower 52-week Treasury bill rate, which as of yesterday amounted to only 0.16%. The court sided with Samsung on this rate. It will calculate prejudgment interest after the final damages amount has been determined.

Apple's preference had been for the jury verdict to be upheld, but for the event that the court was going to disaggregate and modify it, Apple had asked for a conditional judgment as a matter of law (JMOL) increasing the damages award for different reasons. Apple requested a conditional enhancement of up to $155 million. The court denied that request.

Based on today's order, Apple is entitled to the sum of

$598,908,892 ($598.9 million) (the part of the jury's damages award that stands),

whatever a new jury is going to determine as the appropriate damages figure with respect to the 14 Samsung products listed further above,

prejudgment interest at the 52-week Treasury bill rate, and

supplemental damages (for the period between the verdict and the final judgment) based on actual sales figures.

That sum could be less than $1 billion, but it could also be more.

Apple could try to immediately collect the $598.9 million that the judge didn't adjust, but it's unlikely that it will physically receive any money before the final resolution of this dispute.

Based on the court's final damages ruling and its denial of a permanent injunction Apple could now request post-judgment royalties. However, Judge Koh would presumably also prefer to address this matter only after the appeal.

If you're interested in the details of the order, here's the document:

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About Me

Florian Mueller is a former award-winning intellectual property activist with 25 years of software industry expertise spanning across different market segments (games, education, productivity and infrastructure software), diverse business models and a variety of technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof.) He is now developing a game app for smartphones and tablet computers.